Law: Sales Tax Act, 1990

Section: 3,47

Law: Sale of Goods Act, (III of 1930)

Section: 12

Sales Tax Act (VII of 1990)---Ss.3 & 47---Sale of Goods Act (III of 1930), S.12---Goods under warranty---Taxable supply---Taxpayer was aggrieved of charging sales tax by authorities with regard to replacement of auto parts under warranty free of charge---Validity---Warranty assured customers of replacement of defective parts within the agreed period or mileage, free of charge---Such fact could not be rejected in the orders of all the forums---Contract of such sale related to composite supply of vehicle and service for replacement of defective parts, both bundled in one contract---Auto parts were supplied free of charge to customers by taxpayer under warranty and at the time of such replacement no separate consideration was charged for the reason that consideration of such parts formed an integral part of price of the contract which was received at the time of sale---Sales tax charged and paid on contractual consideration at the time of supply of motor vehicle included such tax on auto parts to be replaced under warranty---Cost of warranty replacements was incorporated in price of motor vehicle on which sales tax had already been paid---Absent consideration in such transaction, it did not fall under the definition of 'supply' as contained in Sales Tax Act, 1990, at relevant time---High Court answered all questions in affirmative and set aside orders / judgments of Tribunal and forums below, as replacement of auto parts covered by a manufacturer's warranty were not taxable at the relevant time---Reference was allowed, in circumstances. Commissioner of Sales Tax v. Prem Nath Motors (1979) 43 STC 52 (Delhi); Prem Motors, Gwalir v. Commissioner of Sales Tax, Gwalior 1986 (61) STC 244; Geo Motors v. State of Kerala (2001) 122 STC 285; Mohd. Ekram Khan & Sons v. Commissioner of Trade Tax UP (2004) 6 SCC 183 and Messrs Tata Motors v. The Deputy Commissioner of Commercial Taxes (SPL) and another (Civil Appeal No.1822 of 2007) ref. JUDGMENT SHAMS MEHMOOD MIRZA, JUSTICE:---.--- This Sales Tax Reference is filed under section 47 of the Sales Tax Act, 1990 (the "Act") to seek the opinion of this Court on the following questions of law which are said to have arisen…

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